Monday, July 18, 2011


"Government stimulates the democrat party."
Rush Limbaugh

WPA sign
When President Obama started pushing for a "stimulus" package to jump start the economy, he framed it in terms of the Roosevelt era work programs such as the Civilian Conservation Corps and the Works Progress Administration. Yet every time we saw something actually listing what the money was going to go for it was more along the lines of grants to colleges to research climate change, money to build an underpass for possums, and dog walking parks.

Had the money been more focused on actual infrastructure and WPA style projects, I argued at the time, I'd have less of a problem with the concept. After all, federal infrastructure is a proper spending target at least - bridges, the power grid, etc. I still would have opposed it as grotesquely wasteful and ill timed, but at least I'd be less opposed.

In the end, the "stimulus" package did not have much effect on employment, and overall had little positive effect on the economy beyond staving off collapse of some states headed there anyway. You might wonder why that is so, but a look at how the money has been spent helps explain.

Counting the interest payments, the "stimulus" package cost over a trillion dollars that the US simply does not have. In modern dollars, the WPA spent $200.5 billion (at the time, almost 7% of the GDP each year). For that, the United States saw the Hoover Dam, the Tennessee Valley Authority wire the rural south with power and plumbing, Camp David, and LaGuardia Airport, and many other major projects.

The "stimulus" package alone was over three times the price of the WPA, but no major projects have resulted. You might have seen a road near you resurfaced. You might have seen a bridge built in your town - but probably not.

The truth is, most of the spending from the "stimulus" package went to prop up state governments so they could keep spending on programs they should have cut, dump money into "green" projects like building eco-friendly homes in Detroit, flooding universities with grants for various "green" research efforts, and the now-expired tax deduction increase.

For example, here's what the breakdown was for the more than $3,000,000,000 Alabama got:
  • health and human services 39.79%
  • education 18.13%
  • workforce 17.76%
  • transportation and infrastructure 12.77%
  • housing 2.2%
  • public safety 4.7%
  • energy 2.47%
  • environment 2.17%
That's not atypical for most states. The bulk went to food stamp assistance, medicaid payments, TANF welfare, unemployment benefits, and so on. In particular Alabama saw a lot of the money go to black-targeted spending, such as the Tuskegee Institute which got $14 million in stimulus dollars. The University of Alabama Birmingham received $225,471.04 to study the “Etiology of Geographic and Racial Differences in Stroke.”

The truth is, the "stimulus" package was primarily a flood of federal dollars to the states to allow them to keep up the leftist projects already in place and to encourage more environmentalist study and activity. President Obama made that abundantly clear (and still does) by continually lauding "green technology" which would be the future. It isn't, and many of these companies are collapsing or heading overseas.

Here are some previous major projects for comparison, all adjusted for inflation to be 2011 dollars:

Panama Canal - $15 billion.
Manhattan project - $25.2 billion.
Apollo space program - $145 billion.
Hoover Dam - $690 billion.
The Interstate Highway system - $505 billion.

In the end, the "stimulus" package failed to save the country from economic disaster, failed in its plainly stated goal of preventing unemployment from spiking over 8%, failed to have a significant impact on much of anyone, at least, positive impact. It did help shove us further in debt, prop up states who had less compulsion to control their spending as a result, and give researchers plenty of money for a few years to keep studying things that won't make much of a difference.

If President Obama really wants to know why people have a problem with his spending and the economy, the answers are not that hard to work out. He and the Democrats in congress spent a oceanliner full of cash and what did we get? Another day older and deeper in debt.

No comments: